Business Case: How the public realm and the urban economy go hand in hand

“The more successfully a city mingles everyday diversity of uses and users in its everyday streets, the more successfully, casually (and economically) its people thereby enliven and support well-located parks that can thus give back grace and delight to their neighborhoods instead of vacuity. ” - Jane Jacobs

In biological terms, a community is classified as a group of organisms living in a shared space. An ecosystem on the other hand, is made up of both living and nonliving components. In a forest ecosystem, plants, insects and animals are the communities, while sunlight, soil and nutrients are the equally important non-living components.

In the context of a city, we tend to define communities geographically. But what if we considered our neighbourhoods and streets ecosystems? In urban settings, humans and businesses act as communities while roads and sidewalks are its non-living components.

The health of a community, in the forest or city, relies on constant interaction with both the living and non-living aspects of the ecosystem. A lively business community attracts customers, but the same business community supported by quality public space that is filled with people attracts more customers. Conversely, a good public space accompanied by a vibrant business community becomes more active and engaging. The two operate in symbiosis.

In his book Life Between Buildings, Danish architect Jan Gehl outlines how the quality of outdoor public space influences how often and for what purposes a space is used. Gehl, who has observed behavior in public spaces around the world, notes that when the quality of a public space is low, it is used only for necessary tasks like walking the dog or getting to the bus stop.

When a space is welcoming, designed to be accessible and enjoyable, “a wide range of optional activities” will occur in between those necessary tasks, writes Gehl. These might include spontaneous social interaction, reading a book, eating, window shopping or simply being in and enjoying the space. Good public realm brings people out of their homes and offices, into the world. And that’s good for business.

The economic benefit of good public space

Like any ecosystem, the city ecosystem is cyclical; it is difficult if not impossible to pin down exactly where it begins and ends. A strong business community means jobs, which help people save and invest in property. They pay property taxes, which go towards parks, trees and improving infrastructure to support commercial zones. All of this results in a higher quality of living for urban residents, and that means residents are more likely to stay in their communities and support a strong local business economy.

Let’s start with green space. There’s value in massive urban parks like New York’s Central Park but green space also includes the tiniest patch of grass between a sidewalk and roadway and street trees that encourage pedestrian traffic. In fact, business owners have reported an up to 12 per cent increase in revenue where trees have been planted, according to walkability expert Dan Burden.

Similarly, parks have been found to increase nearby property values. This is an example of a direct economic benefit; parks also save money by absorbing rainfall and preventing the overloading of expensive drainage and sewage systems. On top of this, good parks increase tourism. In 2006, the estimated net benefit of San Diego, California, parks to the tourism industry was more than $40 million.

Much has been made of the economic case for cycling as well. A study in Melbourne, Australia, showed that bike parking spaces generated more revenue than car parking for area businesses, in part because cycling customers had more disposable income but also because there was room for more of them. Making cyclists feel welcome by providing bike parking and infrastructure such as free air-pumps or tools has also been shown to benefit the bottom line, simple solutions within control of any local business.

Cities on the rise

For decades, job growth and population growth in suburban areas has outpaced city centers. Now, young Americans are moving back to urban centres. According to Portland-based City Observatory, the percentage of talented, young workers living in neighbourhoods within three miles of the centre of the nation’s largest metropolitan areas has increased to 55 per cent from 43 per cent in 2000. This trend isn’t only true of trendy cities like New York, Los Angeles or San Francisco. It includes economically challenged and formerly hollowed-out cities such as Buffalo, Cleveland and Detroit. These young, educated workers attract new business, spurring economic growth and urban revitalization.

This represents a major shift in the modern history of urban development. After World War II, a mass exodus from downtown cores to outlying areas created a pull effect on businesses, which followed their customers into the sprawl. As manufacturing and distribution firms moved into the suburbs, banks, retail and restaurants followed. Businesses became just as spread out as people, and just as reliant on highways, cars and a steady suburban population.

Between 2002 and 2007, job growth in outlying areas was growing at about 1.2 per cent each year compared to 0.1 per cent in centralized urban areas. After the 2008 financial crash, that trend completely reversed. From 2007 to 2011, job growth in urban areas increased at a rate of 0.5 per cent per year while falling 0.1 per cent in the ‘burbs.

What this means is not only are people moving back to central areas, but employers are following them. “The demand for urban living is growing in the United States,” says Joe Cortright, economist and founder of City Observatory. He points out that there is currently a shortage of space and that local governments will need to meet that demand by densifying in order to remain competitive and attract new residents. “As cities attract more people, that builds more of the character and attributes that make cities more livable which in turn attracts people,” says Cortright.

Strip malls versus high streets

In the suburbs, retail models mainly take the form of multiple chain stores grouped into shopping complexes, strip malls or mega malls. The physical, not to mention ecological, footprint of the complexes and parking lots is huge.

One thing malls and shopping centres have going for them is coordination. Landlords and developers set parameters for signage, anchor tenants pull in patrons and a critical mass of goods and services guarantees some level of traffic. Marketing is often managed centrally and business directories guide patrons. But while these businesses can attract customers, the business community as a whole is hampered by bad design. For example, studies have shown that when people visit a massive shopping centre they are less likely to visit multiple outlets compared to patrons walking along a high street or main street commercial district. When they did visit multiple stores, they were more likely to drive from store to store despite the outlets’ relative proximity to one another. That means that those shopping centre business are potentially missing out on foot traffic from the other businesses around them.

On the flip side, more urban shopping areas such as high streets are lacking coordination. Businesses don’t always work well together. The city of Ottawa, Ontario, faced serious backlash from brick-and-mortar restaurant owners when looking at policies to regulate food trucks. San Francisco cancelled “Food Truck Fridays” following similar complaints. But if neighbourhoods are ecosystems and businesses make up a community within the ecosystem, it would stand to reason that businesses would do well to work together to attract and retain customers.

The street as a commodity

Businesses are competitive by nature. It’s normal for a restaurant owner to initially react with fear or apprehension when a food cart pod moves onto their turf. But Portland, Oregon, is a great example of why that might not be the best approach. A city known for its vibrant and diverse local economy, most of Portland’s most active business districts have adopted a different approach to competition.

Portland’s Mississippi Avenue boasts a food cart pod (the city has over 700 food carts gathered in groups called pods, a micro example of cohabitation among competitive businesses), many restaurants and plenty of local retailers. But, like many now hip neighbourhoods in the city, Mississippi Ave. wasn’t always the place to be. In the mid-90s, its local businesses included a laundromat and ice cream vendor at opposite ends of the street with boarded-up shops in between.

But things started to change in 1998, when Portland’s ReBuilding Center, which sells reclaimed building materials from tear-downs and construction projects, opened up on Mississippi Ave. The architecture of the unique building added character to the street, and its eclectic wares have since become a tourist attraction.

Another business owner in the city, Philip Stanton, correctly predicted the arrival of the ReBuilding Center would attract more traffic and business to the area, so he opened a restaurant called Mississippi Pizza across the road. Business quickly ramped up as more shops and restaurants opened on the street and Mississippi Ave. began to develop its own character and became a destination for tourists and locals looking for local wares, art and a wide spread of culinary choices.

Mississippi Pizza, Portland, Oregon

Today, Mississippi Pizza has become a community gathering space and one of the neighbourhood’s most successful businesses. But Stanton says his success has less to do with the hot slices of pizza dripping with delicious cheese than it does with the locale.

“Your entire street is a product essentially. Every great restaurant that comes to the street, food cart that comes to the street, great retail that comes to the street, that creates a guaranteed flow of walking traffic. The street itself is a commodity that people come to,” he says.

Portland serves as a great example of how public and private sectors meet to capitalize on each other. Small blocks make walking through Portland a breeze. Tons of local businesses make for rich shopping, dining and entertainment experiences. The streets are lined with rose bushes, art and bike parking. But perhaps most importantly, local entrepreneurs seem to understand the importance of a business or neighbourhood ecology. Together, they have created commercial districts throughout the city that enrich local life and attract tourists year-round.

Another of Portland’s trademark commercial districts, Alberta Street, is in part the busy street it has become today thanks to the commitment of local developers who saw value in improving the entire street and not just their own lot or business. “My vision for buying property is basically, if it’s ugly and I don’t like it, I buy it,” says Roslyn Hill, a board member of Alberta Main Street, the local business association. She has purchased and improved about a dozen properties and leased them to tenants with a few strict rules: no bars on the windows, no closing during business hours (which must be posted) and business owners must interact with the community. Hill, born and raised in Portland, opened the second restaurant on Alberta Street and was a huge part of the area’s transformation from an economically challenged area to a booming commercial area.

Why PDX?

Some of Portland’s success lies in the city’s hands-off approach to regulations. This is certainly the case with the city’s flourishing food cart business, which are allowed to park anywhere that a car can, and congregate in pods without much burdensome permitting or regulation. Where the carts group in semi-permanent pods, they attract visitors, becoming a part of the local business ecology. A patron who finds themselves at a food cart pod one day, might visit a neighbouring restaurant or store the next.

Downtown Portland buildings built before the bylaws preventing blank facades (left) and after (right)

In the 1960s and 70s, Portland was at a major crossroads. Businesses were leaving downtown for the suburbs, the private bus system had filed for bankruptcy and the downtown core had all but ground to a halt economically. When a 1970s study suggested that downtown would benefit from 10,000 new parking spaces, Portland’s mayor and the federal department of transportation instead limited the number of parking spots in downtown and focussed on building public transit to the core. Then, in a move that has gone down in urban planning history as one of the boldest moves undertaken by an American city in the modern era, the city banned blank wall space at ground level and legislated storefront windows along the sidewalk. Why? It was simply more engaging, exciting and inviting.

Cities can capitalize on the demand for urban living, attract new residents, businesses and jobs. How each individual city gets there will be different. The health of urban ecosystems depends on the strength of many factors. A valued, vibrant place will provide fertile ground for unique and resilient business and attract young, educated residents. A growing population is a pull factor for strong businesses which in turn benefits the public realm and helps create and maintain healthy, active communities, strengthens the economy and continues the cycle.

More stories

Bike Racks for Business is a city run program in Thunder Bay, Ontario. Businesses can request a free needs assessment from the city and then purchase bike racks at a discount. To make the process even smoother, Thunder Bay created a bike parking space calculator. For a general retailer with three employees in a 100-square-meter space, the city recommends two short-term spaces and two long-term spaces. It also provides suggestions for rack manufacturers and lays out the specifications for installation on the sidewalk. The bike racks provided, seen above and below, are designed by local artists.

There are different schools of thought when it comes to the notion of placemaking.

On one side are those who believe that playing with the physical realm will alter the use of it. For example, Ethan Kent, senior vice president of Project for Public Spaces, has travelled the globe sharing his experiences and philosophy regarding place making. He writes that placemaking “refers to a collaborative process by which we can shape our public realm in order to maximize shared value. More than just promoting better urban design, Placemaking facilitates creative patterns of use, paying particular attention to the physical, cultural, and social identities that define a place and support its ongoing evolution.”

On the other side are those like Ethan Seltzer, professor of urban studies and planning at Portland State University, who believes that place is about the people and the memories, not the objects, that fill it. “The expectation that somehow government should create place for people, not true. Actually what we’re really talking about here is people making the place with each other. So what does government have to do?” asks Seltzer. Watch the interview with Seltzer above to find out what he thinks.

Charles Montgomery describes this phenomenon with an amalgamation of research in Happy City:

“Aesthetics matter. We walk further when streets feel safe and insteresting. People who live in New York or London typically walk between a third to half a mile to go grocery shopping. Even in Montreal, with its freezing winters and sweat-soaked summers, people report walking about a third of a mile (six to eight minutes) between shops, bags in tow. The numbers are almost as high for people arriving at enclosed shopping malls, which mimic the downtown experience, at least once you’re in the building. But dump us in a vast parking lot surrounded by big-box outlets, and our inclination to walk evaporates. Even when people are equipped with shopping carts, they won’t endure so much as a three minute stroll between retailers. Researchers observed that a third of the shoppers at one Canadian power centre actually parked their cars three or more times during one visit. They just hated trudging across the asphalt desert. It felt ugly, uncomfortable, and unsafe.”

City Observatory crunched data from the U.S. Census Bureau and found that the number of jobs located in central areas is now outpacing job growth in suburban areas in many U.S. cities.

“Looking back over the past decade, we found a remarkable reversal in the pattern of job growth. During the economic expansion from 2002 to 2007, the historic trend of job decentralization was very much present,” the report states. “In the aggregate, the 41 metropolitan areas for which we have comparable data showed a 0.5 percent per year growth in city center employment and a 0.1 percent decrease in employment in the periphery. While only 7 city centers outperformed their surrounding metros in the 2002-07 period, 21 outperformed the periphery in 2007-11.”

A study of Wisconsin storefront improvements found that 90 per cent of business owners reported an average increase in sales of 20 per cent after improvements such as awnings, signs, woodwork and other improvements were made. Restaurants reported the highest increases. More than 80 per cent of businesses reported an increase in new customers. And many of these improvements were relatively minor. “The projects examined in this study range widely in investment outlay (from less than $3,000 to more than $600,000). Consistent with the 1986 study, improvements are often relatively inexpensive. Often very small outlays had very significant impact on sales and rental income,” the study’s authors wrote.

Since 2008, New York City has been working on improving numerous streets by adding cycling and walking infrastructure and improving the aesthetic of the areas.

In Harlem, a street improvement project that scaled an intimidating intersection to human size by adding public space, narrowing the road and redesigning the flow of traffic, resulted in a 48 per cent increase in sales for local businesses. In Brooklyn, retail sales along Vanderbilt Avenue doubled three years after the installation of bike lanes and a tree-lined median.

Read more on the economic benefits of sustainable streets in New York City, including more case studies here.

Congestion costs individuals, business and government. One study, by the Centre for Economics and Business Research, looked at congestion patterns in the U.K, France and U.S. and found that drivers in those countries currently spend an extra 111 hours in traffic annually. If cities maintain the status quo, the cost of traffic congestion annually in those countries is projected to increase by 50 per cent — to nearly $300 billion per year — by 2030. The cumulative cost of traffic congestion in the U.K., France and the U.S. is projected to reach $4.4 trillion in total by 2030.

The Trust for Public Land compiled a report on the economic value of U.S. parks. The report found parks result in both direct economic stimulation as well as cost savings benefits to municipalities.

For example, the report states that five per cent (835,000 overnight visitors and 522,000 day visitors) of San Diego tourists came because of the city’s parks. The city’s 7.5 per cent tax rate meant that revenue to the city as a result of these visitors was estimated at $8,579,000.

A similar poll was conducted in Boston in 2006. Boston’s 5,040 acres of parks including 1,765 acres of natural space, were estimated to have provided a total of $354,352,000 in direct use value based on the number of visits to parks, facilities and events hosted in such spaces.

In regards to savings, Philadelphia’s 10,334-acre park system, which provides more than seven acres of parkland for every 1,000 residents, also provides $5,949,000 worth of storm water retention.

Philadelphia receives an average of 43.29 inches of rain per year. “The model developed by the Forest Service shows that Philadelphia’s parks reduced run off in 2007 by 496 million cubic feet compared with a scenario in which the city had no parks.”

The study, done by Geoffrey Donovan of the U.S. Forest Service, determined that a tree on the lot of a home increased its monthly rent by $5.62, while a tree on the street near the home increased it by $21.

Data showed that walkability (measured here as proximity to local businesses) increased the sale price of a home in a treeless neighbourhood by $3,500. In a neighbourhood rich in trees, that figure rose to $22,000.

The study noted: “On average, a house had 0.558 street trees in front of it and 904 ft2 (84 m2) of canopy cover within 100 ft (30.5 m). When combined, the two tree variables (evaluated at their means) added $8,870 to the price of a house, which represents 3.0% of median sales price. For comparison, this is equivalent to adding 129 finished ft2 (12 m2) to a house.”

On top of increased business revenue, the planting of street trees has been found to reduce motor vehicle collisions, pedestrian/vehicle incidents and increase pride and sense of security in a place.

In Benefits of Urban Street Trees, Dan Burden outlines 22 economic, safety and health benefits of the humble street tree, noting that the cost of planting a tree ranges from $250-$600 including the first year of care and maintenance.